Shops to be forced to accept cash for basic supplies and services

Shops will be forced to accept cash for essential goods and services but are unlikely to face financial penalties if they fail to do so under a plan by the Albanese government to ensure banknotes and coins remain part of the nation’s payment system.

Treasurer Jim Chalmers, who last year foreshadowed a national plan to ensure Australians could keep using cash if they wanted to, revealed on Monday that large and medium-sized retailers that sell groceries and fuel would have to accept banknotes and coins.

The government is seeking to make it mandatory for businesses that sell essentials to accept cash.Credit: Louie Douvis

Treasury would consult on which businesses the mandate should cover as well as look at steps to ensure cash distribution remains sustainable before the rules are made enforceable from 2026.

Earlier this year, big banks, retail giants and Australia Post were forced to step in and strike a $50 million bailout for the struggling cash transit business Armaguard, in a move aimed at securing supplies for at least the next year, after the company said its future was at risk.

The decline in the use of physical currency and the issues with Armaguard had raised concerns that older Australians and people in the bush could be left struggling to get access to cash for day-to-day use.

The COVID-19 pandemic accelerated the decline in the use of cash for day-to-day purchases as some businesses moved to online sales or requested patrons make payments by card or bank transfer.

In 2022, cards accounted for more than three-quarters of all payments. Debit cards were used in 51 per cent of cases and cash accounted for just 13 per cent of transactions.

Independent MP for the rural NSW seat of Calare, Andrew Gee, this year put a private members’ bill to parliament that would mandate the acceptance of cash by businesses that provide services and goods directly to customers. Gee’s bill included fines of up to $5000 for individuals and $25,000 for businesses for failing to accept cash.

Speaking to reporters on Monday, Chalmers said he did not want to penalise businesses.

“We don’t want to penalise small businesses. We want to find an appropriate way to carve out small businesses,” he said.

“We recognise regional pressures and other pressures to make sure that the focus isn’t on penalties. The focus is on making sure that the medium-sized and bigger businesses that sell essentials are taking the cash.”

Chalmers said while cash usage had diminished, it was important for many Australians.

“Now we know the direction of travel is towards digital, but we want to make sure that cash is available in communities, and that people can pay for essentials with cash if they want to and if they need to,” he said.

Cash mandates are already in other countries including Spain, France, Norway and Denmark, and US states including Colorado, Illinois, Montana, Massachusetts, New Jersey and New York.

Liberal finance spokeswoman Jane Hume ridiculed the proposal as “another plan for the plan”, warning it could push up the cost of providing services.

“Inflicting more regulation, more red tape, on businesses, large and small, does have implications for the cost of goods and services and Australians are already paying too high a price for decisions this government is making,” she told ABC television.

The former government abandoned a plan to end the use of cash for transactions of more than $10,000 after a backlash from rank-and-file members of the Liberal Party.

Gee said the government, by failing to mandate the continued use of cash, had failed to take the issue seriously.

“It’s a second-rate approach that acknowledges that the community wants action to keep cash, but it will not be effective. It won’t stop businesses phasing out the use of cash and won’t keep cash king in Australia,” he said.

The Australian Payments Network (AusPayNet), the sector’s self-regulatory industry body, said it understood why the government was looking to protect cash.

“AusPayNet agrees with the government that there will always be a role for cash in our society and we will be working with industry to ensure its continuity,” AusPayNet chief executive officer Andy White said.

Chalmers also announced that from June 30, 2028, people would no longer be able to write cheques and the once-popular payment method will no longer be accepted from September 30, 2029.

The decision to end the use of cheques, which had been foreshadowed, comes after a 90 per cent decline in their use over the last decade.

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